A recent court decision took a massive blow to Reyon Pharmaceutical, which has been fighting a patent legal battle against ViroMed over VM202, gene therapy to treat diabetic neuropathy.

The Seoul Central District Court dismissed Reyon’s petition against ViroMed for a transfer of the holder of VM202’s patent rights on Thursday last week.

In November, Reyon filed the lawsuit to claim that it should have a 50 percent stake in VM202’s global patent rights, instead of the local rights only. Reyon jointly developed VM202 with ViroMed.

■ Related : ViroMed, Reyon in legal battle over gene therapy patent rights

The court’s dismissal and the U.S. regulator’s designation of VM202 as generative medicine advanced therapy (RMAT) raised the chance of VM202’s winning of sales license. The latest developments have pulled down shares of Reyon while boosting those of ViroMed.

Reyon suffered a 5.8 percent fall on Thursday last week from the previous day, reversing the two-day consecutive rises to three-day consecutive drops.

In contrast, ViroMed’s stock prices have soared about 20 percent since the court’s dismissal to close at 256,000 won ($236.6) per share on Wednesday. The shares have been climbing for the sixth trading day consecutively.

“The Seoul Central District Court ruled that Reyon’s petition be inadequate and dismissed the suit. We will disclose more details after receiving the written judgment,” said an official at ViroMed.

Reyon said it had filed the petition to request ViroMed to “implement the contract” between the two firms, not to appeal the interpretation of the contract. As Reyon regards the court's interpretation as faulty, the company plans to apply for mediation by the Korean Commercial Arbitration Board (KCAB) to urge ViroMed to fulfill the implementation of the contract.

The contract between ViroMed and Reyon states that the two should resolve any disagreement on the interpretation of the contract through KCAB. The Seoul Central District Court has made the latest decision, considering such content of the deal.

“The dismissal of the suit was not about winning or losing but who was making the judgment. As our company has been meeting its obligations under the contract, it is right to demand patent rights,” a Reyon official said.

“We have objective evidence to support our claim in the upcoming arbitration. We will do our best to correct ViroMed's issue of not following the contract and guarantee Reyon’s patent rights,” he added.